First-time buyers to get £4,000 deposit boost
First-time buyers may be able to get an extra £1,000 on top of the £3,000 Help to Buy Isa boost when it launches in December.
Newcastle Building Society is planning to allow savers to receive an extra £1,000 from its own Help to Buy product in addition to the government scheme.
The plans involve Newcastle Building Society's Big Home Saver Isa, which pays 2.02% AER, subject to the saver making a deposit each month. The extra £1,000 is paid when completing a mortgage with Newcastle Building Society.
A Newcastle Building Society spokesperson told Moneywise: "We are supportive of the government's Help to Buy Isa and are currently looking to develop a suitable product. The Isa is consistent with our popular Big Home Saver product, which offers a cash bonus of up to £1,000, after successfully saving for and completing a mortgage with the Newcastle.
"We are also looking to offer our CustomIsa facility that would enable customers to hold more than one Isa product and split their annual Isa allowance between different Newcastle Cash Isa products and still get tax-free benefits. This would enable customers to hold a Help To Buy Isa and a Big Home Saver Isa simultaneously."
The Help to Buy Isa is due to launch on 1 December. Under the scheme, savers will receive up to £3,000 from the government, getting £1 for every £4 they save. Savers will get up to £300 when opening the account, and a monthly bonus of up to £50 (based on a £200 monthly saving).
Newcastle Building Society currently offers first-time buyers a two-year tracker mortgage at 1.86% with a £290 valuation fee, a 25-month fixed rate at 1.94%, with a £1,590 valuation fee, or a 25-month fixed rate at 2.27% with a £290 valuation fee. All these loans will revert to a 5.99% standard variable rate after the initial period.
With a tracker mortgage, the interest you pay is an agreed percentage above the Bank of England’s base rate. As the base rate rises and falls, your tracker will track these changes, and so rise and fall accordingly. If your tracker mortgage is Bank of England base rate +1% and the base rate is 5.75%, you will be paying 6.75%. Tracker rates are lower than lender’s standard variable rate (SVR) and as they are simple products for lenders to design, they usually come with lower fees than other mortgage schemes.
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.